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Plug Power: Energy Crisis Puts Green Hydrogen in the Spotlight


The US and its allies are still grappling with how to deal with Russia following its invasion of Ukraine. Given the West’s dependence on Russian crude oil and natural gas, Canaccord analyst Jed Dorsheimer notes that energy has been “weaponized.” “We are seeing dramatic increases in energy prices,” said the 5-star analyst, who believes this will also put “pressure on the economics of green hydrogen.”

That said, as Europe and the US mull over completely banning the import of Russian energy sources, the importance of energy independence has become clearer than ever.

“Thus,” notes Dorsheimer, “policy and subsidy landscapes may shift further to benefit all types of energy generation, including renewables like green hydrogen.”

But the problem with green hydrogen production in the first place is the “high energetic cost,” which makes Dorsheimer skeptical regarding its “viability as a scaled fuel source.”

And all this in a roundabout way brings us to Plug Power (PLUG), a company whose modus operandi is built on the anticipated rise of the “hydrogen economy.”

In its latest quarterly report, for 4Q21, the company generated record revenue of $162 million. That’s all well and good but hasn’t brought it any closer to becoming profitable. In fact, the net loss per share of ($0.33) was triple the Street’s forecast of ($0.11).

“The issue for Plug continues to be whether profitability is achievable,” says Dorsheimer, “or is green hydrogen yet another Ethanol-based ruse.”

In its bid to generate momentum for green hydrogen, Plug Power may keep on reiterating or raising revenue, says the analyst, but the “central question will remain potential profitability.”

In the meantime, then, Dorsheimer stays on the sidelines with a Hold rating, while his price target on PLUG drops from $25 to $21. The implication for investors? Downside of ~19% from current levels. (To watch Dorsheimer’s track record, click here)

The Canaccord analyst, however, belongs to a minority on Wall Street; in fact, his stance is the most bearish. Two other analysts join Dorsheimer on the fence, but with 10 additional Buys, the stock qualifies with a Strong Buy consensus rating. Moreover, most analysts think plenty of gains are in store; going by the $41.15 average target, shares are anticipated to change hands for a 59% premium a year from now. (See PLUG stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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